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Sprout - Vat

Sprout - Vat

Date: 2014-04-18
VAT is levied at 14% on most goods and some at 0% (zero-rated supplies) e.g. basic food groups and exports. If zero rated, it means that you can still deduct all the VAT paid on goods even though you are not charging VAT. Some goods/ services are exempt from VAT (exempt supplies) e.g. residential accommodation which means that any VAT paid on expenses to produce the income cannot be claimed back.

It is only compulsory to register as a VAT vendor when a business earns in excess of R1 million in income in any consecutive twelve month period. This does not necessarily have to in line with the business's financial year. Should a business want to voluntarily register for VAT, they may do so provided that their income is greater than R50,000 in the past twelve months.

In the gap between R50,000 and R1 million you have a choice. You would probably register if you sold goods or services mainly to other companies registered for VAT as they would be able to claim it back and it would allow you then to claim the VAT that you pay out. It would however make it more expensive for non -registered clients so look closely at your market.